After 1949, when China became the People’s Republic of China under the Communist Party and Mao, the Asian country has experienced major changes in economy. Especially since 1978, China has made a lot of progress, and the most recent economic data, such as China’s GDP 2011, show that the communist country is one of the top import and export traders worldwide. The reason for China’s success can be found in the structural changes made throughout the last decades of the twentieth century.

Privatization instead of collectivization

When the leader of the Chinese Revolution Mao Zedong died in 1976, the new Chinese leadership began to introduce the first alterations of the economic system. Whereas Mao believed in the collectivization of land, the new leader Deng Xiaoping initiated a mixed-economy, which included the privatization of land, and thereby led to a greater productivity. Another step that was taken was the support of private enterprises and the promotion of foreign investment. State-owned enterprises and central planning were reduced gradually.

Overcoming the crisis

These reforms led to a huge economic success in the 1990s when Asia was affected by a financial crisis. Thanks to its reserves, China did not become as affected as other neighboring countries, but also had to cope with a huge drop of its export. It was more the internal difficulties, e.g. the loans in the financial system and the layoffs and unemployment resulting from the changes of the state-owned enterprises, which led to a slower economic growth. But despite these problems, China’s economy grew at a rate of approximately 10 percent every year between 1990 and 2004. With that, it is the fastest growing economy worldwide. But it should be noted that the high growth is also a necessity because China has to generate up to 15 million new jobs for the people entering the job market every year. The success of China’s economy is therefore balanced against the challenges which the country has to cope with internally.

Euro bounced off the four year low in the early day although stock indexes have moved slightly up. Euro goes down to $1.2234 from $1.23 because of the growing fears about Europe’s debt crisis.

Minoru Shioiri, chief manager of FX trading at Mitsubishi UFJ Morgan Stanley Securities, told CNBC.com that “People have no idea what it will take to get out of this situation, as they have seen the euro plunge despite a massive rescue package,”. He also told, “There are very big concerns about the eurozone.”

Trichet said in German newspaper Der Spiegel that, “In the market, there is always a danger of contagion — like the contagion we saw among the private institutions in 2008,”